Let's Get Real - How Much Might I Make???

Hi! Newbie here. I have five acres near Senecaville. Lease is signed, up front payments have been received, and the rig is going up as we speak. Here's what I'm wondering... I've looked at the "royalty calculators" and all that kind of stuff. I know my royalty rate is 20 percent, and that the wells in the area seem to be quite successful. (The monster in Monroe County isn't far away.) Does anyone know how much I might ACTUALLY receive in the first year? Does ANYONE have an actual royalty check in their hand? They're saying these are great wells, wet gases, even good amounts of crude. WHAT DOES THAT MEAN TO A GUY WITH FIVE ACRES IN REAL TERMS? Someone told me that I might make $300,000 in the first year. Not buying that. Some things I've read here say I'll make sixty bucks an acre. The guy from Antero told me to expect "$31,300 per year over the average life of the well, 20 to 40 years, but frontloaded" WHAT IS THE TRUTH? Any insights would be great, particularly from someone who has ACTUALLY RECEIVED a royalty check. Thanks!

Views: 18602

▶ Reply to This

Replies to This Discussion

Permalink Reply by robert c miller on October 10, 2013 at 6:29pm

I base that daily amount on a check I got for 5 months total.The average monthly amount is around 1800 . That is for one producing well.

Permalink Reply by Josh on October 11, 2013 at 8:04am

Robert, was the $1800 for all 22 acres or per acre?

 

 

Permalink Reply by robert c miller on October 11, 2013 at 1:02pm

The check I got was for 9100 dollars and was for 5 months.It was for 22 acres total.I expect the monthly amount from now on to be around 1800 or less.Depends on the price of gas and the production./after a few months it will probably be less and less

Permalink Reply by TM on October 11, 2013 at 1:10pm
Looks like you are getting around $83 an acre a month then for 1 producing well. Congrats on the royalties Robert.
Permalink Reply by jonathan M. on October 11, 2013 at 4:40pm
Thanks for the real info. Sounds like a lots less than most people are expecting. Bo boboski is thinking 25k/acre/month.talk about pipe dreams. Seems like 25-100/acre/month is reality
Permalink Reply by bo boboski on October 11, 2013 at 10:50pm

$25. per month per acre is a possilbility. So is $25k! Simple arithmetic, worst well in the state,with worst lease % and deductions,to the best well in the state, %,choke, and lease wording. no deductions.  You could be anywhere between.

Permalink Reply by jonathan M. on October 12, 2013 at 2:55am
I agree it varies greatly. Robert miller is in a gulfport well so for the sake of argent lets say he's in the worst gulfport well which produced around 8 times less than the best antero well to date. Multiply his current royalty by 8 were still a long ways from your 25k figure. Come back to reality!
Permalink Reply by bo boboski on October 12, 2013 at 10:45pm

The production reports from 7 Antero wells were posted by them, I simply did the math, if you are not in those units, that math doesn't pertain.If you have a bad lease ,likewise.

Permalink Reply by Samuel J. Orr on October 10, 2013 at 11:46am

I believe $200/acre per month over lifetime of well would be a conservative figure, again of course dramatically front-loaded. Of course much depends on the size of the drilling unit, and what the well produces and in what quantities. If the royalty rate is 20% and the drilling unit is 640 acres, you would be entitled to 5/640 x 20% of what the well produces. If the well produces a mixture of products they must each be evaluated separately. For your information 1boe (barrel of oil equivalent) of natural gas amounts to 5500 cubic feet or 5.5 mcf, which at current price of $3.68/mcf equatls $20.24. Obviously you would rather have your well produce oil at say $100/barrel. Per unit of energy often expressed in "btus" (british thermal units) natural gas costs roughly 1/5th of what oil costs per btu.

Permalink Reply by Warren Newman on October 11, 2013 at 2:59am
Never count your chickens before they hatch. NO ONE knows for sure what you might get or when you might get it.
Permalink Reply by PHILIP ANGELO on October 15, 2013 at 10:23am

You probrably won't get a check for about 1yr maybe more . I can just about guaranty what ever the amount, you will be dissappionted. don't quit your job. T

hey all like talking big numbers till the check comes.

 

Permalink Reply by mike4t on October 16, 2013 at 5:48am

I posted this as a discussion a couple weeks ago, got no replies:

 

I've seen a lot of discussion about what we as landowners can expect to receive from royalties. When doing my research before we signed 2 years ago, I found from various sources, the estimated range to be between $15,000- $30,000/acre over the lifetime of the well.

 

I'd like to throw this out there to see what people think

 

I'm going to make some assumptions at the beginning

1)The pad drilled has 6 wells on it and all the wells are within 1 unit composed of 1280 acres

2) The first well costs $7M to drill, every other one on the pad cost $5M

3) Royalty rate is 15% with absolutely no deduction

4) The G&O Co. will make $4 profit for every $1 spent (less royalty to landowner)

5) Half the gas is produced in the 1st 5 years (For simplicity, there is no cost added for re-fracing resulting in no additional gas produced in following years)

6) Bonus money paid averages $3000/acre for the entire 1280 acres

7) All costs for transport, enhancement, etc are not figured in because there are no deductions on the royalty

8) All wells are fully producing with no choke off

 

So, the G&O pay bonus money in the amount of $3,840,000 (1280x3000). The wells cost $37,000,000 (5x$6M + 1x$7M). Total cost to the G&O $40,840,000, resulting in a cost per acre of just over $31,900.

 

Add a profit margin of $127,600(400% x $31,900) to the cost per acre of $31,900 = the gas company should expect to recover a minimum dollar amount of gas worth $159,500 from each acre of land.

 

Your royalty is $23,925 (15% x $159,500) per acre. Imagine that! Right in between the $15K and $30K estimate.

 

Taking this further, you will get ~$11,962 the first 5 years, average just over $199/month ($11,962/60)

I made some assumptions, but there are variables in every scenario (a smaller unit's wells won't cost as much to drill, bonus amounts, royalty % may differ or have deductions, wells may produce more or less, depletion may be shorter or longer) but when I hear amount of $3-$4/month/acre to amounts of $1000 and up per acre/month, I wonder what is really right. At $3/acre/month, the G&O are getting killed, but at $1000/acre/month, they're the ones doing the killing

RSS

© 2024   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service